Costco Takes Affordable Housing to New Heights in Los Angeles

Everyone loves Costco, but do you love it enough to live above one? Well, Los Angeles, the city of Angels, is trying just that by stacking new apartments on top of the mega discount store everyone knows and loves.

Thrive Living plans to build an 800-unit affordable housing complex in South Los Angeles, featuring a Costco on the ground floor. The development aims to utilize Costco's rent to reduce reliance on government subsidies for affordable housing. This first “test" will be in the Baldwin Village neighborhood of South Los Angeles. It would have 184 apartments for low-income households and a rooftop pool and fitness center.

Thrive's financing model for these apartments is nothing short of unique. It leverages Costco's rental income to reduce reliance on public subsidies for affordable housing development—a strategy that founder Ben Shaoul, Thrive's founder, aims to scale if this first test run works out. His vision is hopefully exponential growth, seeking to transition from developing hundreds to thousands of units annually through this market-driven approach to addressing housing affordability.

The average median rent for Los Angeles is around $2,775 - $2,949, approximately 52% higher than the national average rent. Downtown Los Angeles has an average rent of $3,336.

Thrive's overall goal is to be inventive with the ongoing housing crisis in Los Angeles, representing a hopefully practical blueprint for new solutions. By leveraging Costco's tenant status to underwrite affordable housing units, the project demonstrates how retail partnerships can create sustainable financing models that reduce reliance on public subsidies while keeping their customer base growing and strong.

The development's dual impact of generating 400 new jobs while delivering much-needed affordable housing stock is a clever mix of addressing workforce development and housing accessibility that, if successful, could be a new way to tackle this issue not beholden to LA.